Senators offer tax bill aimed at helping small businesses

Senators offer tax bill aimed at helping small businesses

A bipartisan pair of senators is offering legislation aimed at preventing small businesses from paying a higher tax rate than large corporations.

The legislation, offered by Sens. Bill NelsonClarence (Bill) William NelsonEquilibrium/Sustainability — Presented by The American Petroleum Institute — Climate change turning US into coffee country Elon Musk mocks Biden for ignoring his company's historic space flight How will Biden's Afghanistan debacle impact NASA's Artemis return to the moon? MORE (D-Fla.) and Susan CollinsSusan Margaret CollinsLooking to the past to secure America's clean energy future Collins to endorse LePage in Maine governor comeback bid McConnell privately urged GOP senators to oppose debt ceiling hike MORE (R-Maine) this week, comes as Congress works to pass tax-reform legislation this year. A House version of the senators' bill was previously introduced by Rep. Vern Buchanan (R-Fla.) and is referenced in House Republicans' tax-reform blueprint.

“Small businesses are the cornerstone of our local economies, and this bill is just one way we can help them succeed,” Nelson said in a news release.

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Most small businesses are "pass-through" entities whose income is currently taxed through the individual tax code rather than the corporate tax code. The top individual tax rate is 39.6 percent, while the corporate tax rate is 35 percent.

Under the bill from Nelson and Collins, income from pass-through businesses would be treated like corporations' income.

Buchanan said he was pleased to see momentum build for the legislation in the upper chamber.

“I’m thrilled that two prominent senators this week introduced my Main Street Fairness Act in the Senate,” he said. “This shows the broad support for making sure that no small business pays a higher tax rate than large companies or corporations.”

The House GOP tax blueprint states that it builds on the concepts in the small business bill. The blueprint lowers the top rate for individuals to 33 percent, the top rate for pass-through businesses to 25 percent and the top rate for corporations to 20 percent.